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In population we trust: Leveraging population for future economy
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Demographic shift: In Indonesia, the number of 60-year-olds and above is projected to amount to 39 million by 2030. (Courtesy of UNFPA/-)
A
ccording to the United Nations, India will be crowned as the most-populous country in 2023, overtaking China’s declining population.
The Indian government has been struggling to restrain India’s population growth because it still struggles to provide a basic standard of living for everyone. On the other hand, China finds it hard to reverse the detrimental impacts of its one-child policy, implemented from 1979 to 2015.
The two cases provide clear insight into how a nation should take care of its demographic shifts. Indonesia, a nation with a huge population, should also strategize wisely about maintaining its population trajectory.
Discussions surrounding economy and demography often come down to “demographic dividends”. Demographic dividends explain how the change in the age structure of a country’s population (brought by declining fertility and mortality rate) promotes economic growth. In general, a demographic dividend occurs during the period when the proportion of working age groups exceeds the proportion of non-working age groups.
Such a situation promotes higher labor supply and personal savings to promote investment and support economic expansion. During this time, a nation is expected to be the most productive, providing a window of opportunity to leap forward in its development stages.
Indeed, every nation must try to maximize the benefit of demographic dividends. However, extreme policies might impair future economic growth.
China is a great example of a country that once successfully benefited from its demographic dividends, but now struggles with a declining population.
